HYPE: An Equity-Research Valuation

Source: Edge Capital Research; CoinGecko, DefiLlama, Token Terminal (Data as of 19 July 2026).

Summary

In our view, HYPE is worth $83 a token on a twelve-month outlook, roughly 30% above spot. While that plays out, the daily buyback works in the holder’s favour, returning almost all the profit and thereby reducing the supply. Over five years, a growing float limits how much that payout can compound per token, and on fully diluted supply the token is overvalued today.

The business is exceptional and is not the debate. Hyperliquid runs a derivatives exchange for perpetual futures, the crypto equivalent of the leveraged futures traded on the CME, contracts that let traders take leveraged positions on an asset's price with no expiry date, and eleven employees generate over $1 billion of revenue a year from it, more than $90 million each against roughly $2.4 million at Apple and $3.6 million at Nvidia. It has taken no venture capital, it converts almost all that revenue into profit, and what decides the outcome from here is the share count.

• Cheap on the earnings it makes now, dear on the shares it may issue: On today's tradable shares, the token sits at a comparable multiple to where exchanges trade; however, measured against total supply, it looks expensive. Which is right depends on how fast locked tokens arrive.
• The value comes from revenue and share count, not a bet on the multiple: Growing fees and a contained float carry the token to $83 in the base case, or $81 once multiple scenarios are probability-weighted.
• The buyback funds the wait: The company returns almost all its profit to holders by buying back and burning the token every day, which supports the price and steadily shrinks supply.
• Dilution does not undo it at the current pace: Net supply is growing near 24mn a year, a quarter of the planned 100mn, because burns and staking absorb the rest.
• A crypto slowdown breaks the case: About 85% of revenue tracks trading activity, so a fall in volumes would cut earnings, and the price would follow.

Key financials

Source: Edge Capital Research; DefiLlama, Token Terminal. Historical multiples use each period's average price; forecasts use the $63.64 reference price, and H1 2026 annualises the half-year. Revenue and cost figures are derived from public on-chain and protocol data and should be treated as indicative rather than precise.

The three revenue lines measure different things, and the gaps between them are not operating costs. Gross revenue is the total fee take. Net revenue deducts the share paid away to builders and to the liquidity vault, about $180 million a year, which is revenue sharing rather than expense. Below net revenue the fee-driven deductions are small, so EBITDA sits just under net revenue. Net income then sits above EBITDA because it adds the reserve-interest line, which carries no builder or vault share and is a balance-sheet return rather than a fee. These are traditional accounting analogies applied to a protocol, not audited accounts.

Valuation: Revenue and Float Set the Price, Read Against Peer Multiples

In our view the token's value follows from its revenue and share count, read against the range comparable businesses trade on. Three lenses do this at different horizons: Lens 1 places today's earnings against peer multiples, Lens 2 derives the multiple a full-payout business deserves, and Lens 3 extends both to a five-year view on each share count. Where they disagree is entirely about how fast locked supply arrives.

Lens 1: On 2026 Earnings, HYPE Sits at the Bottom of the Exchange Range

On the convention used throughout this report, calendar-year net income against period-end supply, the token trades at 18 times 2026 earnings and 14 times 2027 on today's float, the fall driven by growing fees and the reserve-interest stream reaching a full year, and at 73 times and 53 times on fully diluted supply. Mature exchanges trade at 18 to 21 times, so on circulating supply HYPE sits at the bottom of that range, and on fully diluted supply it sits with the crypto venues at 45 to 75 times (Chart 1). The dispersion is not about the business but about which share count the buyer believes will be outstanding when the earnings land, which is the question Lens 3 takes up.

Valuation on all three revenue definitions

Source: Edge Capital Research (Data as of 19 July 2026).

The payout also stands out, though we treat it as a supporting point rather than the basis of the valuation. Because almost all the profit is returned through the buyback, the distribution yield runs at 5.7% of market capitalisation on 2026 estimates, against 1% to 2% at listed exchanges. The yield therefore supports the holding period rather than carrying the valuation case.

Chart 1. HYPE sits at the bottom of the mature exchange range on 2026 earnings and with the crypto venues fully diluted (price to earnings, x)

Source: Edge Capital Research; company filings and market data (Data as of 19 July 2026).

Lens 2: A Full-Payout Model Values the Business at About 19x Earnings

A two-stage payout model returns a justified forward multiple of 19 times. In simple terms, it values the token as the present value of everything it pays out, across two phases: a first phase where payouts grow quickly, then a terminal phase where they settle to a slow rate that continues indefinitely. It is the dividend discount model long used for utilities and tobacco stocks, applied here to buybacks rather than dividends.

We model earnings growing at 14% for five years, fading to a 5% terminal rate, discounted at a 12% cost of equity. That cost of equity is a risk-free rate near 4%, an equity risk premium near 5.5%, and a further 2.5% for crypto, regulatory and key-person risk. The result is stable: moving first-stage growth from 12% to 15% moves the multiple only between 18 and 19 times. The 19 times is therefore a property of the payout structure rather than of an optimistic growth input.

The 14% is grounded in where the revenue comes from. Today the business earns about $1 billion a year, roughly 85% of it from trading fees on perpetual futures. Two forces drive that higher. The first is HIP-3, a permissionless listing venue where anyone can create a new futures market for any asset, whether equities, commodities or indices, which has gone from about 2% of perpetuals volume at the start of 2026 to nearly 50% by mid-year. The second is AQAv2, an arrangement under which about 90% of the interest earned on customer USDC collateral flows back to the protocol, beginning in October 2026. We hold the growth rate below the recent run-rate because both are young and because roughly 85% of revenue still tracks the crypto cycle.

That growth matters to holders because almost none of it is retained. The buyback takes about 99% of net fees automatically, so the profit reaches holders as the revenue grows, and the yield scales with the business rather than with management intent. The trade-off is that with nothing reinvested, growth has to come from the product, such as HIP-3, rather than from capital allocation.

Justified forward multiple, two-stage payout model

Source: Edge Capital Research estimates.

Applying the 19x: A Twelve-Month Base Case 30%

Our twelve-month value is $83 a token, about 30% above spot, within a bear-to-bull range of $30 to $140 (Chart 2). It rests on forward earnings of about $1.1 billion and a float near 248 million tokens as the buyback retires supply, valued on the 19 times the payout model derives.

About $150 million of those earnings is reserve interest, and it is worth isolating. Traders post USDC as collateral, that cash earns interest, and under an agreement with Circle and Coinbase, called AQAv2, about 90% of that interest now returns to the protocol, much as net interest income on client cash is a large earnings line at Schwab and Robinhood. The stream goes live in October 2026 at roughly $150 million a year on about $6 billion of USDC, so it adds a partial period to 2026 and a full year from 2027. Because the balances scale with open interest, the stream rises and falls with the same cycle as fees rather than offsetting it.

Twelve-month base case, by scenario

Source: Edge Capital Research estimates (Data as of 19 July 2026). Probability-weighted value $81.

Chart 2. Twelve-month value across scenarios, against spot (value per token, $)

Source: Edge Capital Research estimates (Data as of 19 July 2026). Dashed line is the current price; dotted line the probability-weighted value.

Lens 3: Over Five Years, the Float Caps the Return, Not the Business

On a five-year view the token compounds at about 5% a year. This is not because the business stalls; earnings roughly double to about $1.6 billion by 2031. It is because the share count keeps rising, dividing that growing profit among more and more tokens. Spread across the tokens trading today, the price is still higher in five years; spread across the total supply, more than twice as many tokens, an investor buying at spot ends up worse off.

Of the two, the value based on today's tradable tokens is the better guide, because the observed data supports it. Net supply is growing near 24 million a year, not the 100 million-plus the raw schedule implies, since staking and burns absorb most of the release. The gap between the two figures is the honest measure of the supply risk, and it is why the position is attractive over twelve months but capped over five. Most of the return comes in the first year, from revenue and a contained float; beyond that, a growing float limits how much the payout can compound per token.

The burn does more than offset dilution; it lowers the ceiling. Because retired tokens leave total supply, the maximum is falling rather than fixed, as the fund destroys close to $2 million of HYPE a day, roughly 12 million tokens a year at the reference price.

Because the buyback is fixed in dollars rather than in tokens, it retires more supply as the price falls. That makes it a stabiliser rather than a support, and it is why net supply growth has held near a quarter of the schedule across a price range from roughly $30 to $65 (Chart 4).

Chart 3. Circulating supply has grown slowly and remains near a quarter of maximum (circulating supply, mn, and share of 955mn max)

Source: Edge Capital Research; DefiLlama, Tokenomist (Data as of 19 July 2026).

Chart 4. The circulating and fully diluted multiples converge as float rises and burns cut supply (price to earnings, x)

Source: Edge Capital Research; DefiLlama, Token Terminal (Data as of 19 July 2026).

Five-year value, base case

Source: Edge Capital Research estimates (Data as of 19 July 2026).

The Two Risks That Move the Case: Reflexivity and Supply

Fee reflexivity is the risk that matters most, because it moves earnings and the multiple in the same direction. About 85% of fees track trading activity, so a collapse in volatility cuts the payout and compresses the multiple at once, which is how the bear case reaches $30. Whether that exposure counts as crypto beta is a classification question rather than a diversification one, because the HIP-3 equity, commodity and index markets settle on the same chain and draw on the same liquidity. Two consecutive quarters of fees down more than 20% would end the value case.

Supply absorption is the second risk, and it is behavioural rather than structural. Contributors can claim about 10 million tokens a month, and the case depends on them staking rather than selling, since sustained selling pushes the forward float toward 330 million and the base case below spot. We do not view either risk as systemic, because both are measurable on-chain before they reach earnings.

Named mechanisms, and what to watch

Source: Edge Capital Research (Data as of 19 July 2026).

The upside is the mirror image of the first two rows, and the same two variables drive both tails. If fees compound through an upcycle and contributors keep staking, the float stays contained and the buyback retires more, moving value toward the bull case of $140. Looking out, the main risk is not that the business stalls, but that locked supply reaches the market faster than the buyback can absorb it. The number to watch is the monthly contributor claim on the sixth and how much of it is staked rather than sold, which is visible on-chain within days.

Conclusion

We are constructive on HYPE on a twelve-month view and disciplined about the reason. The franchise is exceptional, the earnings are growing, and the buyback returns almost all of them to holders while the float stays contained. The return comes from that revenue and that share count, and the price we reach sits below where comparable businesses trade. The principal risk is reflexivity in fees, and the supply schedule is a real but observable second-order concern. The constraint is the monthly unlock data, and we would revisit the work if fee momentum or contributor staking behaviour turns.

Model appendix

Assumptions, stated. Every input is a choice, and the material ones are sensitised.

Twelve-Month Value: Multiple and Float Sensitivity

The two swing variables, at base forward earnings of $1,082mn. The float only pushes the value below spot above roughly 330mn, which requires contributors to start selling most of what vests.

Source: Edge Capital Research estimates.

Five-Year Value: Growth and Discount Sensitivity

Source: Edge Capital Research estimates.

Key Assumptions

• Reference price $63.64, frozen 19 July 2026, refreshed at 21 July 2026. Reported multiples use calendar-year net income against period-end supply. The twelve-month valuation uses forward net income of $1,082mn, being a fee run-rate of about $930mn plus roughly $150mn of reserve interest, against a forward float of 248mn. Reserve interest is the AQAv2 stream, live from October 2026, modelled at a flat reserve yield near 3.75% and grown with USDC balances at the same 14% rate as the business; recent open interest has grown faster, but that is a recovery from the October 2025 low and we do not extrapolate it.
• Circulating supply 222.45mn, total 955.31mn (net of burns already recognised). Some trackers show a higher circulating figure that counts staked tokens; we use the issuer-consistent measure.
• Current gross revenue $1,000mn, net revenue $820mn, EBITDA about $815mn and net income about $810mn; costs below net revenue are negligible, so net revenue, EBITDA and net income are nearly identical, while the gross to net gap is fee revenue paid away to builders and the liquidity vault, and roughly 99% of net income is returned via buyback. Forward net income $1,082mn including about $150mn from the reserve-interest stream.
• Justified multiple 19x, from a two-stage payout model: 14% growth for five years, 5% terminal, 12% cost of equity.
• Net float growth about 24mn a year, measured from on-chain supply. Gross claims run about 10mn a month, of which close to 70% stays staked as a residual, against buybacks of about $750mn a year, or roughly 12mn tokens at the reference price.
• Assistance Fund holdings roughly 46mn HYPE on a July on-chain read, recognised as permanently burned by the December 2025 validator vote and removed from supply, not held as treasury stock.

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